Systems Thinking, Business Process and Disruptive innovation Brian Mandel

Introduction – Brian Mandel 35+ years of Professional Services with a focus on technology Primary application areas have been: Government automation Tax processing Criminal justice DoD Financial Services Remittance and payment processing Archival Extensive M&A experience

The Evolution of Checks Year Volume (millions of items) Volume percent change Value (billions of dollars) Value percent change Average daily volume (millions of items) Average daily value (billions of dollars) Average value per check (dollars) 2017 5,153 -1.7 8,438 4.3 20.6 33.8 1,638 2016 5,241 -3.9 8,089 -0.3 20.9 32.2 1,543 2015 5,452 -5.0 8,109 0.0 21.7 32.3 1,487 2014 5,742 -4.1 1.9 22.9 1,412 2013 5,988 -6.5 7,960 -2.4 23.9 31.7 1,329 2012 6,402 -4.3 8,152 2.6 25.5 32.5 1,273 2011 6,691 -13.2 7,944 -10.0 26.7 31.6 1,187 2010 7,712 -10.2 8,825 -15.5 30.6 35.0 1,144 2009 8,585 -10.1 10,441 -24.1 34.1 41.4 1,216 2008 9,545 -4.6 13,760 -13.5 37.9 54.6 1,442 2007 10,001 -9.8 15,899 -3.3 39.8 63.3 1,590 2006 11,083 -9.4 16,443 4.8 44.2 65.5 1,484 2005 12,228 -12.1 15,685 9.8 48.7 62.5 1,283 2004 13,904 -12.0 14,286 -7.4 55.0 56.0 1,028 2003 15,806 -4.7 15,431 2.7 63.0 61.0 976 2002 16,587 -1.9 15,033 1.2 66.0 60.0 906 2001 16,905 -0.5 14,853 7.2 67.0 59.0 879 2000 16,994 13,849 0.4 815

Decline in check volume creates opportunity…. …even for a 100 year old company that has built its business around printing checks Average dollar of each check goes up Makes accuracy even more important Electronic payment with a SEPARATE electronic remittance document creates an operational problem which can only be solved with: Headcount Artificial intelligence

Sample Customer Results

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The Opportunity Prior state Future State On premise application – license revenue Build once, serve one On premise configuration – services revenue On premise support – services (maintenance revenue) Build once, serve many Cost based pricing model (cost + margin) Future State SaaS – hosting the application – Services Revenue Build once, serve many = Leverage Hosted configuration – Services Revenue Build once, serve many, iterative learning/improvement – Services Revenue Value based pricing model (FTE/cost avoidance)

Case Study Create a 3-6 page case study format response, using the lecture materials and content covered in classes to date, addressing the following: Current State of Deluxe What trends have disrupted the Deluxe business model Is the actions depicted in the Mr. Mandel’s presentation transformative enough What else could they do What future challenges could they face Can you think of strategies that might inure them to these upcoming challenges Think of this in the context of what type of systems they have (use systems thinking), who are the stakeholders in the transformation, can they effectively use Digital technologies to drive “solution” change and marketing into the “new Deluxe” Hint: Look at other materials (their website, SEC filings, Annual Reports, etc.)

Questions?